The real “squeezed middle”

In his leader’s speech tomorrow Ed Miliband is expected to announce his intention to reach out to Britain’s struggling middle classes. As he told yesterday’s Sunday Telegraph:

“My aim is to show that our party is on the side of the squeezed middle in our country and everyone who has worked hard and wants to get on.”

It is an approach that has recently been stressed by John Healey on Left Foot Forward, and it can be expected to gain support from all sides of the Labour Party.

However, “middle class” is a flexible term. In the USA it means precisely those in the middle – people who are above the poverty line, yet far from wealthy. But in the UK the media frequently use it to describe the top ten per cent of earners, and even the prime minister has described himself as part of the “sharp-elbowed middle classes”.

Ironically, considering that backing the squeezed middle is being counter-posed to being too close to the unions, the most thorough research into the real middle Britain has been carried out for the TUC, largely by Stewart Lansley.

The two key texts are:

• Life in the Middle The Untold Story of Britain’s Average Earners;

• Unfair to Middling How middle income Britain’s shrinking wages fuelled the crash and threaten recovery.

Yet who are the “squeezed middle”? As the graph below shows the median weekly income is around £400 a week, while the mean is quite a bit higher as the small number of super-rich have a disproportionate effect on the mean.

If we define the squeezed middle as those clustered around the median, the TUC’s work, along with a YouGov poll, shows that the group differs very significantly from those just above them on the income scale.

Many assume that the early capitalist wealth structure of a triangle shaped society – with a tiny minority of the rich at the top and a great mass of the poor below, has been replaced by a diamond, with the great mass of people around the middle and small numbers of rich and poor above and below.

That may have been true in the post-war years, but the middle has slipped down and we now have an onion shaped wealth distribution with the bulk of people well below the average – as the graph shows.

Middle-income Britain is much less likely to have had a university education, more likely to have experienced unemployment, much less likely to enjoy a final salary pension scheme and much less likely to hold shares and have significant levels of savings.

They may be better off in many ways than their parents, but they have slipped further behind more privileged groups. Significantly, their relative incomes have fallen behind, opening up new income and wealth gaps between Middle Income and better off Britain, but most especially with the rich, the group that has prospered most in the last three decades.

Middle Income Britain is aware of this - 40 per cent of survey respondents in this group say their job has a lower status than their father’s, with only 29 per cent saying it has a higher status.

Much of the debate about Labour’s future electoral strategy has depended on slippery categories such as middle class, affluent and core voters, which no-one ever quite defines. A serious analysis of the concerns and worries of the real middle income Britain offers much more potential for practical political debate. And while it may shock much of the media, they would do well to start with the TUC’s research, as the Daily Mail’s most perceptive commentator suggests.